2013 (3) TMI 267 - HC - Income Tax

Adoption of sale consideration - Difference in sale consideration in books of buyer and seller - In the agreement of sale dated 9.9.1999, the sale consideration was stated as Rs.6,48,000/-; whereas the sale deed was executed on 21.08.2000 stating the sale consideration as Rs.2,33,760/-. - In her return, the purchaser of the property shown that an amount of Rs.6,48,000/- was invested for purchase of the property - Held that - As pointed out by the Tribunal, it would be an anomaly if in the case of purchaser the sale consideration of Rs.6,48,000/- is accepted and it is not accepted in the case of the seller. Referring to the recitals in the agreement of sale and that it was executed by Asiya Basheer, wife of assessee which is substantiated by the income tax returns filed by the purchaser, the AO rightly held that sale consideration was Rs.6,48,000/- which was confirmed by the CIT(Appeals) and the Tribunal. No legal infirmity warranting interference with the order of the Tribunal. The substantial question of law raised in this appeal is answered infavour of the revenue and Tax Case (Appeal) is dismissed.

Summary

Issues:
Interpretation of sale consideration discrepancy between sale agreement and sale deed.

Analysis:
The appellant challenged the adoption of Rs.6,48,000 as the full sale consideration of a property based on a sale agreement, arguing that the information was gathered behind his back without furnishing a copy and without additional materials. The property in question was a vacant plot sold by the appellant to two partners of a partnership firm. A survey at the firm's premises revealed a sale agreement between the appellant's wife and the purchasers for Rs.6,48,000, while the registered sale deed showed a consideration of Rs.2,33,760. The appellant initially disclosed a total income of Rs.40,393 but did not disclose capital gains from the property sale. The Assessing Officer later completed the assessment, adopting the sale consideration at Rs.6,48,000 and the long-term capital gains at Rs.5,13,826, as per the sale agreement. The Commissioner of Income Tax (Appeals) and the Tribunal upheld this decision, noting that the purchasers had admitted to paying Rs.6,48,000. The Tribunal emphasized that it would be inconsistent to accept this amount as the purchaser's investment but not as the sale consideration for the seller.

The appellant contended that the sale agreement was signed by his wife without proper authorization as he was not in India at the time, and there was no power of attorney granted to deal with the property. It was argued that the wife had no legal capacity to execute the agreement, and the subsequent sale deed was executed by only one party, not both as in the agreement. In contrast, the revenue's counsel supported the lower authorities' decisions, highlighting the acceptance of Rs.6,48,000 as the purchaser's investment and the lack of legal flaws in the Tribunal's order. Despite the appellant's objections, it was acknowledged that the wife had signed the agreement on behalf of herself and her husband, and the appellant had honored the agreement by showing capital gains in his revised return.

The High Court affirmed the lower authorities' findings, emphasizing the wife's signature on the sale agreement and the purchaser's acceptance of Rs.6,48,000 as the investment in her income tax returns. The court agreed that it would be inconsistent to reject this amount as the sale consideration for the seller while accepting it as the purchaser's investment. Consequently, the court dismissed the appeal in favor of the revenue, concluding that the substantial question of law was resolved in favor of the revenue without any legal infirmity.